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CANBERRA - Australian Treasurer Peter Costello last night unveiled a further A$31.5 billion ($35bn) round of tax cuts in a Budget bolstered by a forecast A$10.6 billion surplus and a flood of corporate tax receipts from a booming business sector.
Costello's 12th and possibly final Budget also delivered
boosts for health and aged care, education, childcare, the environment and defence.
And ahead of an election which polls indicate the ruling conservative coalition is likely to lose, Costello's largesse further extended to low-income earners' superannuation savings, while forecasting the fund set up to manage the Government's future unfunded superannuation commitments will reach about A$52 billion by June.
Costello's generous Budget was framed in the rosy glow of more than a decade of continued growth, with the economy expected to recover from drought to expand by 3.75 per cent in 2007-08, tied to continued low inflation and low unemployment, despite a slowing in jobs growth.
Business investment is at its highest level in 32 years as a proportion of GDP, the resources boom continues to push exports after investment of more than A$70 billion in the past six years, and productivity is expected to rise over the coming 12 months.
This has enabled Costello to produce tax cuts for the fourth successive year, giving Australians total tax relief of more than A$100 billion, mainly by lifting thresholds to combat bracket creep.
From July an increase in the low income tax threshold will mean no tax will be paid until annual incomes hits A$11,000, while the 30 per cent threshold has been lifted from A$25,001 to A$30,001.
Higher income-earners will benefit from July next year, when the 40 per cent threshold rises from A$75,001 to A$80,001 and the 45 per cent trigger moves from A$150,001 to A$180,001.
For single-income couples with two children earning average wages, the latest tax cuts will increase take-home pay and lift the point at which they become net taxpayers to A$50,183.
For a person earning A$50,000 a year a weekly tax saving of A$14.42 a week will produce annual relief of A$750, with the annual saving rising to A$1250 for someone earning A$100,000 a year.
Young families will further gain from an increase in the rate of childcare benefit of 10 per cent on top of indexation, and higher thresholds for exemption from the Medicare levy to broaden free access to the universal health care system.
The Budget also provides A$1.6 billion for aged care initiatives, A$772 million to improve the detection and treatment of chronic and complex conditions, and A$468 million for medical research, designed to offset the impact of an ageing population.
Education receives a major boost from a new, A$5 billion higher education endowment fund to fund university infrastructure and research facilities, a A$768 million funding and enrolment package, and an extra 3500 federal scholarships and A$222 million to lift income support for tertiary students.
First and second-year apprentices in trades where skills are in short supply will receive A$500 education vouchers to offset fees and, if under 30, a A$1000 tax-free wage top up.
And Costello moved to bolster the Government's environmental credentials with a A$741 million climate change package - including a doubling to A$8000 for rebates for household solar panel installation - and A$10 billion over 10 years to manage Australia's threatened water supplies.
HIGHLIGHTS
* No tax until annual income hits A$11,000.
* Thirty per cent tax threshold lifted from A$25,001 to A$30,001.
* Forty per cent threshold rises from A$75,001 to A$80,001.
* Forty-five per cent threshold moves from A$150,001 to A$180,001.
* A$741 million climate change package.
* A$10 billion over 10 years to manage Australia's threatened water supplies.
